The New York Court of Appeals has followed Delaware in holding that the business-judgment rule applies to going-private mergers as long as certain shareholder-protective measures are met. The court’s May 5, 2016 decision in In the Matter of Kenneth Cole Productions, Inc. Shareholder Litigation, Case No. 54, adopts the standard set forth by the Delaware Supreme … Continue Reading

The Delaware Court of Chancery last week dealt another blow to disclosure-only settlements of merger litigation and refused to approve a proposed class-action settlement arising from Zillow, Inc.’s acquisition of Trulia, Inc. The court’s decision held that the supplemental disclosures that formed the basis of the settlement were not “material or even helpful to Trulia’s … Continue Reading

Last week, Delaware Governor Jack Markell signed Senate Bill 75, which amends the Delaware General Corporation Law to prohibit Delaware stock corporations from adopting bylaws that force shareholders to pay legal fees if they do not prevail in lawsuits asserting internal corporate claims against Delaware corporations. The legislation also allows Delaware corporations to designate Delaware … Continue Reading

Yesterday, the Delaware House of Representatives unanimously passed a bill prohibiting publicly traded corporations from adopting bylaws that force shareholders to pay legal fees if they do not prevail in lawsuits asserting internal corporate claims against Delaware corporations. The bill would also allow Delaware corporations to designate Delaware – but not any other state – … Continue Reading

Yesterday, the Delaware Senate passed legislation prohibiting publicly-traded corporations from adopting bylaws that force shareholders to pay legal fees if they bring internal corporate claims against the company in court and do not win. The legislation also allows Delaware corporations to designate Delaware – but not any other state – as the exclusive forum for … Continue Reading

On April 29, 2015, Senator Bryan Townsend introduced legislation that would amend the Delaware General Corporation Law (DGCL) to ban fee-shifting bylaws for Delaware stock corporations (non-stock corporations would continue to be able to adopt fee-shifting bylaws). The bill, Senate Bill No. 75, would also confirm the Court of Chancery’s decision in Boilermakers Local 154 … Continue Reading

In December, we reported on the Delaware Court of Chancery’s continued validation of board-adopted forum-selection bylaws in City of Providence v. First Citizens BancShares, Inc., 99 A.3d 229, 234 (Del. Ch. 2014), and the proposed amendment to the Delaware General Corporation Law (DGCL) that would eliminate the ability of Delaware stock corporations to impose liability for … Continue Reading

The D&O Diary featured a version of this post, entitled “New Debate in January on Delaware Bylaws re Shareholder Liability,” as a guest blog post. Many thanks to Kevin LaCroix of The D&O Diary for publishing our post. The ability of corporations to impose liability on shareholders through bylaws and charter provisions has been the subject of … Continue Reading

Originally published as a Proskauer Client Alert. The New York Appellate Division, First Department, ruled yesterday that the business-judgment rule – not the entire-fairness standard of review – can apply to a going-private transaction with the majority shareholder where the majority shareholder did not participate in the board’s vote on the merger, the remaining directors … Continue Reading

Introduction written by Tanya Dmitronow and Julia Pizzi. Full analysis written by Sarah Gold and Richard Spinogatti. Although they often involve overlapping issues, shareholder derivative lawsuits are fundamentally different from securities class actions. While the object of a securities class action is to hold the company (and, perhaps, its directors and officers) liable for harming investors and … Continue Reading

Remember corporate raiders, green-mailers, and sharks? They have all moved up town and been embraced by ISS and its institutional investor clients as shareholder activists committed to corporate ‘‘reform.’’ Cheap capital and the expanded use of derivatives to accumulate enormous equity positions both quickly and quietly have fueled a binge that has more than tripled … Continue Reading

The attorney-client privilege is the oldest privilege recognized by Anglo-American jurisprudence, and its origins can be traced to ancient Rome. It is critical to encouraging frank and full communications between clients and their attorneys, thereby promoting the public interest in legal compliance and the proper administration of justice. The attorney-client privilege is, however, an exception … Continue Reading

In Kahn v. M&F Worldwide Corp., the Delaware Supreme Court unanimously affirmed the Court of Chancery’s decision that the business judgment standard, rather than the entire fairness standard of review, applies to controller freeze-out mergers where the controller’s proposal is conditioned at the outset on both Special Committee approval and a favorable majority of the … Continue Reading

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